💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

RPT-Advantage Brazil: Australian beef exports hit by sliding slaughter rate

Published 18/12/2015, 03:57 pm
RPT-Advantage Brazil: Australian beef exports hit by sliding slaughter rate
JBSS3
-

(Repeats with no changes to text)

* Two beef producers idle Australian plants, cut working hours

* Australia cattle prices hit record high on supply worries

* Brazil, Argentina to benefit as Australia beef supply dwindles

By Colin Packham

SYDNEY, Dec 18 (Reuters) - For three years, Australian cattle abattoirs have worked around the clock slaughtering record numbers of animals to supply to the world market, breaking only for a few days over Christmas.

Now, some of the biggest plants have been idled with the national herd at its smallest in decades, heralding a sharp cut in sales by the world's third-biggest beef exporter to major buyers such as the United States, China and Japan.

While this will buoy global beef prices, as the United States rebuilds its own herd, it will also offer exporters such as Brazil and Argentina an opportunity to step up sales.

"This is a once-in-a-generation decline but unfortunately we can expect herd numbers to stay significantly low for at least the next two years as cattle producers rebuild," said Tom Maguire, general manager at meat exporter Teys Australia.

Teys, co-owned by Cargill CARG.UL , and the Australian unit of JBS SA JBSS3.SA , the world's top beef producer, have both temporarily idled their processing plants and cut working hours - evidence that supply is scarce.

Australian ranchers had been forced to cull at a blistering pace in recent years as a severe drought wilted pastures. The dry spell at its worst covered an area larger than the size of South Africa across Australia's main cattle belt in the east.

"There are a lot of people in Queensland who don't have any stock left," said Bim Struss, a farmer from the state, which is home to about half the national herd. "We are down to a five-year low for our breeding females."

RECORD SLAUGHTER

Nearly 30 million animals were slaughtered over the past three years and estimates from Meat and Livestock Australia (MLA) show the national herd is at a 20-year low.

Cull numbers fell more than 16 percent year-on-year in November, according to the industry body.

Australia's Eastern Young Cattle Indicator reached a record high of A$5.97-3/4 ($4.28) a kilogram on Dec. 2 on supply fears.

The shortage will worsen if ongoing dryness linked to an El Nino weather pattern eases, reviving pastures and enabling farmers to focus on building herds. urn:newsml:reuters.com:*:nS9N0X4017

"We are trying to be in a position for when the rains come so we are trying to keep as many young females as possible," farmer Struss said.

Australia has already cut its estimate for beef exports to 1.19 million tonnes for the year to July 2016, from its prior view of 1.225 million tonnes. Last year, it shipped a record 1.35 million tonnes. urn:newsml:reuters.com:*:nL3N13W5OO

"There is going to be a prolonged lull in exports, simply because the stocks are not going to be there, and it could take two, three years at least to rebuild stocks," said Phin Ziebell, agribusiness economist, National Australia Bank.

BRAZILIAN OPENING

Lower Australian beef supply could force its top customer the United States, as well as Japan and China, to look for shipments from countries such as Brazil and Argentina.

"If you look at Brazil, it has the potential to grow. It already has the largest cattle herd in the world and with the real depreciation, it can increase its global footprint," said Matt Costello, animal protein analyst at Rabobank.

Rabobank sees a 6 percent rise in Brazil's 2016 exports.

Brazil has already got permission to sell fresh beef to the United States - the first step in overcoming a 14-year ban on shipments by the U.S. following outbreaks of foot-and-mouth disease in the Latin American country.

"We know there is a growing demand in Asia ... Australia won't be able to meet all this demand," said Antonio Camardelli, President of Brazil's beef export association, Abiec.

"Australia and the U.S. are who export the most there. But the United States, the more it exports the more it needs to import. Brazil can benefit from all of this."

($1 = 1.3955 Australian dollars)

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC: Australian cattle

http://reut.rs/1m6r3J1

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.